Fifty-three percent of small business owners believe that setting up their small businesses would have been easier with more funding, according to a 2006 Wells Fargo survey. Funding for a small business is critical at any stage, but financing has special importance when trying to launch. Banks are the obvious route for funding a small business, but entrepreneurs may have to look to alternative sources of financing.

Function

Without some kind of funding, a small business cannot function, so the company must have some steady source. Financing will help you get your small business off the ground and allow it to grow and expand, according to the U.S. Small Business Administration (SBA).

Types

Ultimately, you must borrow money, receive grant money or issue stock to finance a company. Loans and grants come in several different forms. You might, for example, use an existing credit card to fund your business or go with a commercial business loan. Grants may come from organizations that want to help entrepreneurs from certain demographics. They may also come from the government, if the small business does research or serves a purpose for the public good.

Time Frame

The stage of development of a small business is a huge factor in determining how much and what type of funding a small business taps. Most small businesses need less than $35,000 to get started, but commercial banks usually do not bother with loans that small, so the owner must find an alternative source. During the periods when the small business grows and transitions to a mid-size or large business, it will need the most amount of capital, according to the Federal Reserve Board.

Size

How much funding a business needs at any particular time depends on several factors, such as its budget and industry. For start-ups, Dun &amp; Bradstreet recommends putting down on paper everything you need for your business and then looking at the balance sheets of competitors. Entrepreneurs should have three to six months worth of operating capital, just in case sales do not meet expectations. For your budget, allow a 10 to 20 percent cushion for unplanned expenses.

Tip

Angel investors are a highly popular option for small business, as most venture capital firms want to put their money into low-risk large companies, according to CNN. Microloans are another option if you do not need much money; the SBA and nonprofit foundations are the best source of microlending. If you plan to use debt to finance your company, check to see the average debt-to-capital ratio for your industry.